ITO WD 22(3)4, NAVI MUMBAI V. KULSWAMI CO OP CREDIT SOCIETY, NAVI MUMBAI

ITA 6790/MUM/2012

• Counselvise Citation: 679019914 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 29-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-11-2012
• Court: TRIBUNAL
• Department Lawyers: E SHRIDHAR SHRI R V NADREKAR
• Assessee Lawyers: ASSESSING OFFICER US
• Keywords: Revised return
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO 6790 /MUM/201 2 ASSESSMENT YEAR: - 2009 - 10 ) ITO, WD - 22(3) - 4, VASHI RLY. STATION COMPLEX, TOWER NO. 6, 3 RD FLOOR, VASHI, NAVI MUMBAI. VS.` M/S KULSWAMI CO - OPERATIVE SOCIETY, F - 3/1, CENTRAL FACILITY BUILDING, APMC MARKET, SECTOR 19, TURBHE, NAVI MUMBAI 400 705. PAN/GIR NO. AAA AS2059L APPELLANT RESPONDENT CO NO. 05/MUM/2014 ARISING OUT OF ITA NO. 6790/MUM/2012 ASSESSMENT YEAR: - 2009 - 10) M/S KULSWAMI CO - OPERATIVE SOCIETY, F - 3/1, CENTRAL FACILITY BUILDING, APMC MARKET, SECTOR 19, TURBHE, NAVI MUMBAI 400 705 VS.` ITO, WD - 22(3) - 4, VASHI RLY. STATION COMPLEX, TOWER NO. 6, 3 RD FLOOR, VASHI, NAVI MUMBAI. PAN/GIR NO. AAAAS2059L APPELLANT RESPONDENT ORDER PER G.S. PANNU, AM T HESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 33 , MUMBAI ( HEREINAFTER REFERRED TO AS THE CIT(A) ) DATED 31.08.2012 WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER U/S. REVENUE BY SHRI E. SHRIDHAR ASSESSEE BY SHRI R.V. NADREKAR DATE OF HEARING 29.07.2015 DATE OF PRONOUNCEMENT 21 .08.2015 2 ITA NO 6790/MUM/2012 AND CO NO. 05/MUM/2014 ASSESSMENT YEAR 2009 - 10 PAGE 2 OF 7 143 (3 ) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT ) DATED 16.12.2011, PERTAINING TO THE ASSESSMENT YEAR 2009 - 10 2. THE REVENUE HAS RAISED FOLLOWING GROUND OF APPEAL: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,14,64,254/ - BY HOLDING THAT THE ASSESSEE BEING CO - OPERATIVE CREDIT SOCIETY IS NOT A CO - OPERATIVE BANK AND HENCE IS ENTITLED FOR DEDUCTION U/S 80P OF THE I.T. ACT. 3. THE ASSESSEE BEFORE US IS A CO - OPERATIVE SOCIETY, WHICH IS, INTER ALIA, ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2009 - 10, IT FILED A RETURN OF INCOME DECLARING T OTAL INCOME AT N IL ON ACCOUNT OF CLAIM OF EXEMPTIO N U/S 80P OF THE ACT. IN THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE , THE GROSS TOTAL INCOME AS PER THE INCOME AND EXPENDITURE A CCOUNT WAS DECLARED AT RS. 1,14,64,524/ - , WHICH WAS ALSO CLAIMED AS EXEMPT IN TERMS OF SECTION 80P OF THE ACT AND ACCO RDINGLY, THE RETURN ED INCOME WAS DECLARED AT N IL. 4. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSING O FFICER SHOW - CAUSED THE ASSESEE AS TO WHY THE CLAIM OF EXEMPTION U/S 80P OF THE ACT BE NOT DISALLOWED IN VIEW OF THE PROVISIONS OF SUB - SECTION ( 4 ) OF SECTION 80P OF THE ACT, INSERTED W.E.F 01.04.2007. IN TERMS OF SUB - SECTION ( 4 ) OF SECTION 80P OF THE ACT, THE PROVISIONS OF SECTION 80P OF THE ACT WERE MADE INAPPLICABLE TO A CO - OPERATIVE BANK OTHER THAN PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANKS. THE STAND OF THE ASSESSING OFFICER WAS THAT SINCE THE ASSESSEE WAS A CO - OPERATIVE SOCIETY REGISTERED 3 ITA NO 6790/MUM/2012 AND CO NO. 05/MUM/2014 ASSESSMENT YEAR 2009 - 10 PAGE 3 OF 7 UNDER THE MAHARASHTRA STATE CO - OPERATIVE SOCIETIES ACT , 1960 AND WAS ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS, SUCH AN ASSESSEE WOULD BE COVERED BY THE PROVISIONS OF SUB - SECTION ( 4 ) OF SECTION 80P OF THE ACT. ACCORDINGLY, ASSESSEES CLAIM FOR EXEMPTION U/S 80P WAS DENIED IN TOTO AND THE GROSS TOTAL INCOM E OF RS. 1,14,64,254/ - WAS DETERMINED AS THE FINAL TAXABLE INCOME. 5. IN APPEAL BEFORE THE CIT(A), THE PERTINENT PLEA OF THE ASSESSEE WAS THAT A CO - OPERATIVE SOCIETY ENGAGED IN THE ACTIVITY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS IS QUITE DIFFEREN T FROM A CO - OPERATIVE BANK, WHICH FALLS UNDER THE RESTRICTION PLACED IN SUB - SECTION ( 4 ) OF SECTION 80P OF THE ACT. THEREFORE, AS PER THE ASSESSEE, THE PROVISIONS OF SUB - SECTION ( 4 ) OF SECTION 80P OF THE ACT DID NOT DISENTITLE THE ASSESSEE FROM CLAIM OF EX EMPTION U/S 80P OF THE ACT. THE CIT(A) FOUND THAT SIMILAR ISSUE CAME UP IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2008 - 09, WHEREIN, THE PREDECESSOR CIT(A) HAD UPH E LD ASSESSEES CLAIM FOR EXEMPTION U/S 80P OF THE ACT. FOLLOWING THE PRECEDENT IN THE ASSE SSEES OWN CASE , BY WAY OF THE ORDER OF PREDECESSOR CIT(A) FOR ASSESSMENT YEAR 2008 - 09, THE CIT(A) HELD THE ASSESSEE ENTITLED FOR CLAIM OF EXEMPTION U/S 80P OF THE ACT. 6. BEFORE US, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT IDENTICAL CONTROVERSY HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE ASSESSES OWN CASE FOR ASSESSMENT YEAR S 2007 - 08, AND 2008 - 09 VIDE ITA NOS. 3223/MUM/2011 & 505/MUM/2012 DATED 28.03.2014, WHEREBY IT HAS BEEN HELD THAT ASSESSEE CO - OPERATIVE SOCIETY DOES NOT FALL WITHIN THE RESTRI CTION PLACED IN SUB - SECTION ( 4 ) OF SECTION 80P OF THE ACT. THE FOLLOWING DISCUSSION IN THE ORDER OF THE TRIBUNAL DATED 28.03.2014 (SUPRA) IS RELEVANT: - 4 ITA NO 6790/MUM/2012 AND CO NO. 05/MUM/2014 ASSESSMENT YEAR 2009 - 10 PAGE 4 OF 7 4 . HAVING HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD, IT IS PERTINENT TO MENTION THAT THE ONLY ISSUE ARISING OUT OF BOTH THE APPEALS RELATE TO THE ALLOWABILITY OF THE EXEMPTION/DEDUCTION CLAIMED BY THE ASSESSEE U/S 80P OF THE INCOME TAX ACT. THE ALLOWABILITY OF EXEMPTION OF THE SAID INCOME DEPENDS ON WHETHER THE ASSESSEE/COOPERATIVE CREDIT SOC IETY IS A CO - OPERATIVE BANK OR NOT FOR THE PURPOSES OF SECTION 80P(4) OF THE ACT SINCE ACCORDING TO THE SAID PROVISION, DEDUCTION UNDER SECTION 80P SHALL NOT BE AVAILABLE TO ANY CO - OPERATIVE BANK OTHER THAN PRIMARY AGRICULTURAL SOCIETY OR PRIMARY CO - OPERAT IVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. 4.1 IT IS THE CASE OF THE REVENUE THAT THE ASSESSEE HAS BEEN FUNCTIONING AS A COOPERATIVE BANK AND BY VIRTUE OF SECTION 80P(4), THE ASSESSEE IS NOT ENTITLED FOR THE BENEFIT OF SECTION 80P AND ALSO THE ASSESSEE IS NOT COMING WITHIN THE PURVIEW OF PRIMARY AGRICULTURAL SOCIETY OR PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. IT IS THE CASE OF THE ASSESSEE THAT IT IS NOT A COOPERATIVE BANK BUT ONLY A COOPERATIVE SOCIETY TO WHICH CLAUSE (4) OF SECTION 80P IS NOT APPLICABLE. 4.2 IN THIS CONNECTION, IT IS PERTINENT TO MENTION THAT THE ASSESSEE HAS BROUGHT ON RECORD BEFORE THE LOWER AUTHORITIES, THE LETTER OF THE CBDT BEARING NO. F. NO. 133/06/2007 - TPL DATED 09.05.2008 ADDRESSED TO THE DELHI URBAN T&C SO CIETY LTD., STATING THAT FOR THE PURPOSES OF SUBSECTION 4 OF SECTION 80P, COOPERATIVE BANK SHALL HAVE THE SAME MEANING AS ASSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT 1949, ACCORDING TO WHICH COOPERATIVE BANKS MEANS A STATE CO - OPERATIVE BANK, A CENTRAL CO - OPERATIVE BANK AND PRIMARY CO - OPERATIVE BANK. THOUGH THE SAID CLARIFICATION IS GIVEN BY THE CBDT IN CONNECTION WITH SOME OTHER ASSESSEE, THE CRUX OF THE MATTER PERTAINS TO THE CLARIFICATION OF CO - OPERATIVE BANK FOR THE PURPOSE OF SUBSECTION 4 OF SECTION 80P. IT IS OBSERVED THAT THE SAID CLARIFICATION HAS ALSO BEEN RELIED BY THE TRIBUNAL IN MANY CASES. THEREFORE, COOPERATIVE BANKS MENTIONED IN THE SAID SUBSECTION INDICATES ONLY THE STATE, CENTRAL AND PRIMARY CO - OPERATIVE BANKS ONLY. 4.3 MO REOVER, FOR COMMENCING A BANKING BUSINESS BY THE CO - OPERATIVE SOCIETY, DUE LICENSE HAS TO BE OBTAINED FROM THE RESERVE BANK OF INDIA AND IN THE ASSESSEES CASE, THERE IS NO SUCH LICENSE OBTAINED FOR COMMENCING ANY BANKING BUSINESS. THE MERE FACT THAT THE A SSESSEE HAS BEEN PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND THEREBY EARNS INTEREST AND DIVIDEND CANNOT MAKE THE SOCIETY INTO A BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE ACT. IF THE INTENTION OF THE LEGISLATURE WAS NOT TO GRANT DEDUCTION TO COO PERATIVE SOCIETIES CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, THEN THIS SECTION WOULD HAVE BEEN DELETED. THIS PROPOSITION IS SUPPORTED BY VARIOUS DECISIONS INCLUDING THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF CIT VS. JAFARI MOMIN VIKAS COOPERATIVE CREDIT SOCIETY LTD AND THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT VS. JAYALAKSHMI MAHILA VIVIDODESHAGALA SOUHARDA SAHAKARI LTD. [2012] 137 ITD 163. 5 ITA NO 6790/MUM/2012 AND CO NO. 05/MUM/2014 ASSESSMENT YEAR 2009 - 10 PAGE 5 OF 7 4.4 IN ADDITION TO THE AFOREMENTIONED DISCUSSION, THE DISTINCTION BET WEEN COOPERATIVE SOCIETY REGISTERED UNDER THE BANKING REGULATION ACT 1949 AND THE COOPERATIVE SOCIETY REGISTERED UNDER THE MAHARASHTRA STATE COOPERATIVE SOCIETIES ACT 1960 AS BROUGHT OUT BY THE LD.CIT(A) ON THE BASIS OF THE SUBMISSION OF THE ASSESSEE IS EX TRACTED HEREUNDER: SL. NO. CO - OPERATIVE SOCIETIES CO - OPERATIVE BANKS 1 THE CO - OPERATIVE CREDIT SOCIETIES ARE REGISTERED UNDER MAHARASHTRA STATE COOPERATIVE SOCIETIES ACT, 1960 AND GOVERNED, REGULATED, ADMINISTERED AND SUPERVISED BY THE REGISTRAR OF THE COOPERATIVE SOCIETIES, GOVERNMENT OF MAHARASHTRA. CO - OPERATIVE BANKS ARE REGISTERED UNDER MAHARASHTRA CO - OPERATIVE SOCIETIES ACT, 1960 AND ADMINISTERED BY REGISTRAR OF CO - OPERATIVE SOCIETIES, GOVT. OF MAHARASHTRA. CO - OPERATIVE BANKS ARE REGULATED AND SUPERVISED BY THE RESERVE BANK OF INDIA. PROVISIONS OF BANKING REGULATION ACT, 1949 WITH MODIFICATIONS SPECIFIED IN SECTION 56 OF THE BANKING REGULATION ACT, 1949 ARE APPLICABLE TO CO - OPERATIVE BANKS. SCHEDULE 1 TO SCHEDULE V ARE APPLICABLE TO CO - OPERATIVE BANK. 2 CO - OPERATIVE SOCIETIES ARE CLASSIFIED AS RES OURCE/THRIFTS SOCIETIES IN THE CERTIFICATE OF REGISTRATION ISSUED BY REGISTRAR OF COOPERATIVE SOCIETY. CO - OPERATIVE BANKS ARE CLASSIFIED AS CO - OPERATIVE BANK. 3 CO - OPERATIVE CREDIT SOCIETIES CAN ACCEPT DEPOSITS AND ADVANCE LOANS ONLY TO THE MEMBERS. HENCE THE BUSINESS ACTIVITIES ARE RESTRICTED TO MEMBERS AND HENCE IT CAN BE TERMED AS A MUTUAL ASSOCIATION/SELF HELP GROUP. CO - OPERATIVE BANKS CAN ACCEPT DEPOSITS FROM PUBLIC. HOWEVER, UNLIKE CO - OPERATIVE CREDIT SOCIETIES THEY CAN ADVANCE LOANS TO THE MEMBERS O NLY. 4 C5O - OPERATIVE CREDIT SOCIETIES CAN6NOT ACCEPT DEPOSITS FROM PUBLIC. CO - OPERATIVE CAN ACCEPT DEPOSITS FROM PUBLIC. 5 THE7 PROVISIONS OF BANKING REGULATION ACT 1949 ARE NOT APPLICABLE TO THE CO - OPERATIVE CREDIT SOCIETIES. THE PROVISIONS OF BANKING REGULATION ACT 1949 ARE APPLICABLE TO THE CO - OPERATIVE BANK. 6 THE CO - OPERATIVE CREDIT SOCIETIES DO NOT REQUIRED LICENSE FROM RESERVE BANK OF INDIA TO CARRY ON ITS BUSINESS. THE CO - OPERATIVE BANKS ARE REQUIRED TO OBTAIN LICENSE FROM RESERVE BANK OF INDIA TO CARRY ON ITS BUSINESS. 7 THE CO - OPERATIVE CREDIT SOCIETIES DO NOT HAVE CHEQUE FACILITIES, CLEARING FACILITIES AND THEY CANNOT ISSUE DEMAND DRAFTS, PAY ORDERS ETC. THE CO - OPERATIVE HAVE CHEQUE FACILITIES, CLEARING FACILITIES AND THEY ISSUE DEMAND DRAFTS , ASSESSMENT YEAR ORDER, BANK GUARANTEES ETC. 8 CO - OPERATIVE CREDIT SOCIETIES CANNOT USE WORK BANK/BANKERS IN THEIR NAME CO - OPERATIVE BANKS ARE MANDATORILY REQUIRED TO USE WORLD BANK/BANKERS IN THEIR NAME. 9 RESERVE BANK OF INDIA HAS NO STATUTORY POWER O F CONTROL AND SUPERVISION OF RESERVE BANK OF INDIA HAS VESTED WITH STATUTORY POWERS OF CONTROL AND SUPERVISION OF 6 ITA NO 6790/MUM/2012 AND CO NO. 05/MUM/2014 ASSESSMENT YEAR 2009 - 10 PAGE 6 OF 7 COOPERATIVE SOCIETIES. COOPERATIVE BANKS. THE ABOVE DISTINCTION MAKES IT VERY CLEAR THAT THE ASSESSEE IS NOT A CO - OPERATIVE BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE ACT. 4.5 AS REGARDS THE CLAIM OF THE REVENUE THAT FOR THE ASSESSMENT YEAR 2007 - 08, THE ASSESSEE HAS NOT CLAIMED THE DEDUCTION OF THE SECTION 80P OF THE ACT IN THE RETURN OF INCOME BUT CLAIMED THE SAME ONLY DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND HENCE THE CLAIM OF THE ASSESSEE IS NOT ADMISSIBLE IN VIEW OF THE FINDINGS OF THE HONBLE APEX COURT IN THE CASE OF GOETZE INDIA LTD. [284 ITR 323 (SC) (2006)], IT IS PERTINENT TO MENTION THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF THE CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS P. LTD. [(2012) 349 ITR 336 (BOM)] HAS HELD THAT THE APPELLATE AUTHORITIES HAVE THE POWER TO CONSIDER THE CLAIM NOT MADE IN RETURN OF INCOME. THE HOBLE BOMBAY HIGH COURT WHILE DECIDING SO, HAS CONSIDERED THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF GOETZE INDIA LTD. (SUPRA). IN VIEW OF THAT MATTER, THE LD.CIT(A) GIVING RELIEF TO THE ASSESSEE AT THE APPELLATE STAGE ON THE CLAIM OF DEDUCTION NOT MADE IN THE RETURN OF INCOME IS JUSTIF IED. 4.6 CONSIDERING THE ENTIRE FACTS AND POSITION OF LAW, WE ARE OF THE CONSIDERED OPINION THAT THE LD.CIT(A) IS JUSTIFIED IN DIRECTING THE AO TO ALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80P OF THE ACT ON THE REASON THAT THE ASSESSEE, A COOPERATIV E CREDIT SOCIETY IS NOT A BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE ACT. THUS THE ORDERS OF THE LD.CIT(A) DATED 11.02.2011 AND 29.11.2011 FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 RESPECTIVELY ARE UPHELD. 7. FOLLOWING THE AFORESAID PRECEDENT, WHIC H HAS BEEN RENDERED IN ASSESSEES OWN CASE UNDER IDENTICAL CIRCUMSTANCES, WE HEREBY AFFIRM THE ORDER OF CIT(A) UPHOLDING ASSESSEES CLAIM FOR EXEMPTION U/S 80P OF THE ACT. THUS THE REVENUE FAILS IN ITS APPEAL. 8. INSOFAR AS THE CROSS OBJECTION RAISED BY THE ASSESSEE IS CONCERN ED , IT DOES NOT INVOLVE ANY INDEPENDENT ISSUE BUT IS PRIMARILY IN SUPPORT OF THE CONCLUSION DRAWN BY THE CIT(A). SINCE WE HAVE ALREADY CONFIRMED THE ORDER OF CIT(A) IN THE CONTEXT OF THE APPEAL OF THE REVENUE IN EARLIER PARAS, THE C ROSS OBJECTION RAISED BY THE ASSESSEE IS RENDERED INFRUCTUOUS. 7 ITA NO 6790/MUM/2012 AND CO NO. 05/MUM/2014 ASSESSMENT YEAR 2009 - 10 PAGE 7 OF 7 9 . IN THE RESULT, BOTH THE CAPTIONED APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 1 S T DAY OF AUGUST 2015. S D / - S D / - ( SANJAY GARG ) (G.S. PANNU) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER ) MUMBAI DATED 2 1 - 0 8 - 2015 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI